Small Hospitals Will Fight Rather Than Switch

2006 photos of Lehigh Valley Hospital, currently undergoing expansion at its main site in Salisbury Township. (Frank Wiese/The Morning Call)

Jeffrey G. Fleishman and Ann WlazelekOf The Morning Call

A revolution is sweeping across the health care industry, and it has turned medicine into big business. Bigger health systems mean better care, say some analysts. Others predict a crisis in which compassion is replaced by Wall Street toughness. Morning Call reporters Jeffrey G. Fleishman and Ann Wlazelek examined the trend in a three-month investigation encompassing more than 100 interviews and review of hundreds of medical documents and studies.

Small, independent hospitals that lack the corporate resources of large health systems are fighting to keep their share of the market by selling radon detection services, buying fancy equipment together and advertising like their bigger competitors.

"We're probably microcosms of what they're doing," said Wayne Mugrauer, spokesman for North Penn Hospital, Lansdale.

North Penn, a 7-year-old hospital with 150 beds, has created a parent company and is promoting several new and unusual services, like a for-profit radon detection service for homeowners, real estate firms and banks; weekend "sitting" service for the frail or elderly being cared for at home; and a day care center for sick children.

In recent months, North Penn also has given away videocassette tapes featuring the hospital's maternity services at tape rental outlets.

Like most of the hospitals surveyed, North Penn prefers to remain independent and believes its future is secure. It has held patient stays to between 5.7 and 6.2 days, one of the lowest in the Delaware Valley, Mugrauer said. It also performs 60 percent of all surgery without an overnight stay.

As a result, North Penn projects a $1 million profit this year and a 5 percent increase in admissions next year.

"We're attempting to focus our efforts where we know best," Mugrauer said, "I'm sure there are trade-offs in missed opportunities, but we have neither the size nor the depth to consider some other options. "

One hospital that behaves very much like the bigger systems is Sacred Heart in Allentown. Sacred Heart has a parent corporation that owns a free- standing emergency care center in the city and a group medical practice in Northampton. The corporation also is about to market its own HMO.

Sacred Heart does not belong to a national group, but Vice President Wanda Morgan said, "We will keep our options open foranything that enables us to do a better job. "

Another independent hospital exercising its options is the 89-bed Quakertown Community Hospital.

Quakertown has performed well in recent years, with "healthy but modest" profits and admissions climbing 4 percent annually. Yet because of its size, Quakertown has entered into numerous agreements with other hospitals. With Doylestown, Grand View and North Penn hospitals, for instance, it will buy a sophisticated scanning device called a magnetic resonance imager (MRI), to be installed in a free-standing medical center near Lansdale.

Quakertown also shares a hospice and radiation safety service with Grand View, and sends its lab work to HealthEast. With Horizon Health System in Bethlehem, Quakertown shares a membership in Premier Hospitals Alliance, a national purchasing and management group, as well as Horizon Care, a service for Medicare patients.

"Our feeling is we are the little guy on the block. We probably can't boast, brag and strut around that we can beat up everybody else. But there's a kind of virtue here in learning a little humility. We know we can't reinvent the wheel, so if you can't do it better, why not join them?" said Kate Flynn, Quakertown's chief operating officer. "Fostering those relationships has only been to our benefit. We're not afraid of letting down our defenses. "

Allentown Osteopathic, the only osteopathic hospital in a five-county area, has joined both a national and regional association to get better rates on supplies, laundry service and medications.

It is in good financial shape, showing record profits the past two years, despite recent drops in admissions, said Evon Midei, vice president of administrative services.

"We feel we have a long and healthy future as a freestanding hospital," Midei said. "We don't see a need or the advantage at this point of affiliating with other hospitals. "

The osteopathic hospital hopes to increase admissions by promoting physician services, emphasizing outpatient surgery, encouraging its medical residents to stay in the area and lowering the cost per patient stay.

Easton Hospital, which has restructured to hold a for-profit realty company and fund-raising arm, also has decided to remain "unattached" after a year-long consideration of offers from systems like HealthEast and Horizon Health System.

Although offers of increased capital and management services were enticing, "In the final analysis, we believed we would be able to do what we thought necessary with our available resources," said Sara George, marketing director for Valley Health, Easton's parent company.

She said the hospital is more interested in joint ventures, like the psychiatric hospital proposal it has submitted to the state Department of Health with HealthEast and Hahnemann University.

"We're getting out of the cubicle mode, in which hospitals are solid concrete structures that people come to. We are making strides to reach out and take services to them," she said.

The 362-bed hospital is strong enough to face future competition, according to George. Strong enough, in fact, that it plans to expand and renovate.

"We're looking at the best opportunities for the hospital and its physicians," said spokesman Scotty Campbell.

Grand View, which created a parent and realty company 1 1/2 years ago, refers a lot of its seriously injured or ill patients to Allentown area hospitals, he said. But to join a system, the hospital wants something in return.

"Why should we jump if we don't gain anything?" he asked.

Grand View is not, however, very worried about competition from nearby North Penn, Doylestown or Quakertown hospitals, according to Campbell, because Sellersville is a very rural community, whose residents prefer getting primary care close to home.

"The people here like their local druggist, market and local tailor," he said. "That applies to health care too."